Daring financiers with money machines

Most people use automated teller machines to get a little cash.

Most people use automated teller machines to get a little cash.

By Rich Blake
March 2003
Institutional Investor Magazine

William Munier and Harry Brossman use ATMs to make money.

Munier, a former Chase Manhattan Corp. executive, and insurance industry veteran Brossman run Goldstar Holdings, a two-year-old company that buys existing ATMs, collects transaction and clearing fees from consumers and banks, pays for maintenance and other overhead and pockets the profit.

“The most profitable machines spit out as much as $1,000 a month in fee revenue,” explains the 44-year-old Munier. “I own ten myself, and each earns between 12 and 14 percent annually, which in this market is a pretty nice return.”

Now Goldstar is trying to sell the idea to institutional and high-net-worth investors. In a securitizationlike process it dubs “ATM aggregation,” Goldstar wants to package machines in groups of up to 1,000 and distribute their cash flow to investors. Should Goldstar eventually sell the machines, the investors get a capital gain.

Goldstar buys only high-traffic, fee-generating ATMs, generally from retailers and entrepreneurs, for about $16,000 each. (Banks, which are prospective purchasers from Goldstar, own fewer than half of the 350,000 ATMs in the U.S.) Goldstar will contract with a servicer such as Brink’s to maintain the machines.

Munier says now is the time to get in on a transaction-fee bonanza: “These machines are going to be used for more than just getting cash. You can buy stamps at ATMs now, they’re increasingly being used for government assistance or Social Security payments, and one day you’ll be making your mortgage or car payments at an ATM.”

Related